Hi,
While calculating why do we include proposed dividend in calculation of FMP.I mean why we are not deducting as liability from the total assets to for calculation of capital employed?
Hi,
While calculating why do we include proposed dividend in calculation of FMP.I mean why we are not deducting as liability from the total assets to for calculation of capital employed?
Capital Employed = Assets (-) Liabilities
In the above formula liabilities are those ones which are actual liabilities . Proposed dividend is not deducted because it is not an actual liability . The company may in future either increase or decrese the dividend declared . However in case it was Declared Dividend then it is an actual liability and hence it is deducted from the assete to calculate Capital Employed .
| Originally posted by : Harshal | ||
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Capital Employed = Assets (-) Liabilities In the above formula liabilities are those ones which are actual liabilities . Proposed dividend is not deducted because it is not an actual liability . The company may in future either increase or decrese the dividend declared . However in case it was Declared Dividend then it is an actual liability and hence it is deducted from the assete to calculate Capital Employed . |
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Thank u Harshal
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